John Williams said the Iran war is expected to push up headline inflation. He put inflation for this year at around 2.75% and said underlying inflation should ease later in the year.<\/p>\n
He said the Federal Reserve is focused on underlying inflation and that the core inflation picture has not changed much. He also said tariffs remain a major factor in current inflation.<\/p>\n
Williams said monetary policy is set appropriately and can be adjusted if needed. He forecast GDP growth of 2% to 2.5% this year, with an unemployment rate expected to stay stable.<\/p>\n
He described the labour market as complex and characterised it as low hire and low fire. He said compensation growth is in line with productivity and is not adding pressure to inflation.<\/p>\n
He said the US economy is resilient and that technology is supporting productivity. He also said businesses have been adapting to a more uncertain environment.<\/p>\n
He said the Fed remains focused on its work and that leadership concerns are not affecting it. The US Dollar Index was down 0.07% at 99.92.<\/p>\n
The stated intention to keep monetary policy steady suggests a period of lower interest rate volatility. The MOVE index, a measure of bond market volatility, has recently fallen to 80, its lowest point in over a year, supporting this view. This environment is favorable for strategies that profit from stable rates, such as selling options on SOFR futures to collect premium.<\/p>\n
We should expect a split between rising headline inflation and moderating core inflation due to the Iran war’s impact on energy. Brent crude futures just pushed past $98 a barrel this week, the highest we have seen since the supply shocks of late 2025. This divergence makes long call options on oil and energy sector ETFs an attractive way to trade the expected rise in headline CPI.<\/p>\n
With the Federal Reserve holding firm while inflation ticks up, the US dollar is showing weakness. The Dollar Index breaking below the 100 level is a technically significant event that could signal further declines. We see this as an opportunity to look at call options on currencies like the Euro or Swiss Franc, which tend to strengthen against a weaker dollar.<\/p>\n
The economy’s resilience, driven by tech productivity, points toward continued strength in equities, particularly the Nasdaq. First-quarter earnings for 2026 have broadly beaten expectations, citing efficiency gains from AI integration. With the VIX trading below 15, buying call spreads on the QQQ ETF is a cost-effective way to position for further upside.<\/p>\n
The “low hire, low fire” labor market creates a stable economic backdrop, reducing the risk of a sudden downturn. March’s non-farm payrolls report showed a gain of 175,000 jobs, confirming a trend of steady but not overheating growth that has been in place since mid-2025. This stability reinforces the case for a neutral Fed and removes a key source of uncertainty for the market.<\/p>\n
Create your live VT Markets account<\/a>\u00a0and\u00a0start trading<\/a>\u00a0now. <\/b><\/p>\n","protected":false},"excerpt":{"rendered":" Williams: Iran war may lift headline inflation to 2.75%; core easing expected; Fed policy steady; growth 2-2.5%.<\/p>\n","protected":false},"author":103,"featured_media":17025,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[59],"tags":[],"class_list":["post-46897","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-live-updates"],"acf":{"acf_article_selection_author":null},"aioseo_notices":[],"_links":{"self":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/46897","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/users\/103"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/comments?post=46897"}],"version-history":[{"count":0,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/posts\/46897\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media\/17025"}],"wp:attachment":[{"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/media?parent=46897"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/categories?post=46897"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vtmarkets.com\/en-ca\/wp-json\/wp\/v2\/tags?post=46897"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}